The government has so far focused on addressing early retirement, with the chancellor, Jeremy Hunt, urging the over-50s to get off the golf course.
The sharp rise in economic inactivity – when working-age adults are neither in work nor looking for a job – is more likely to be driven by people waiting for treatment as the health service struggles to cope, as well as by people who permanently live in poorer health, according to the consultancy LCP.
“There is a real risk of the government barking up the wrong tree when it comes to the growth in economic inactivity,” the report says.
Sir Steve Webb, the former pensions minister who co-authored the LCP report, said rising long-term sickness was much more significant.
“We were gobsmacked by what we found. It turns out there are fewer earlier retired today than at the start of the pandemic. You wouldn’t believe that from ministers’ speeches and talk of getting people back off the golf course,”
Official figures published last week showed early retirement explains none of the increase in inactivity since the start of the pandemic. While the number of people who are economically inactive is more than half a million higher than in February 2020, the number who have quit the labour market due to retirement has fallen.
The number of “long-term sick” has risen by more than 350,000 since the start of the pandemic, accounting for more than half of the growth in inactivity over that period.
“This could reflect NHS pressures as those who would otherwise have been treated or had their chronic condition better managed and able to work now find themselves ‘long-term sick’ as they wait for treatment or live permanently in poorer health,” the report says.